Hi all, L. Andersen & V. Piterbarg note in their book that American swaptions exercised within a rate reset period exercise into a swap starting the following rate reset date, and their payoff includes an "exercise fee" based on the current Libor reset (with reset date prior to exercise). They note that the "exercise fee" is like an accrued calc (i.e. not discounted). How "standard" a feature is this? They note this makes American options path-dependent (unlike Berms, which are just multi-exercise), and that this can affect their valuation under certain market conditions and trade terms.

Could someone point me to ISDA protocol/definition where this payoff is specified? Where should one look for for this specification in a term sheet, or maybe on ISDA website? (I only have a trade confirm, which is rather brief).